The government has taken control of the UK’s third-largest steelworks in a bid to secure the future of its 1,450 employees.
Creditors owe Speciality Steels UK (SSUK) hundreds of millions of pounds, and it has just been granted a compulsory winding-up order by insolvency courts.
This means the steelworks, with sites in Rotherham and Sheffield, is now in the hands of the official receiver with oversight from consultancy firm Teneo.
The government has confirmed it will cover the ongoing wages and costs of the plant until a buyer is found.
Manufacturing
Airbus workers to strike for 10 days over pay
Port Talbot furnace construction begins, securing 5,000 jobs
Jeffrey Kabel, chief transformation officer of SSUK’s parent company Liberty Steel, said he was disappointed that the High Court had passed the company into government control.
He told the BBC: “We are by far the best company to run this business. We’ve run it for 10 years. Put a lot of blood, sweat and a huge amount of money into it.”
Liberty Steel had applied for a four-week adjournment so it could place the company in “pre-pack administration” and sell assets to a bidder, but the judge found the firm to be “hopelessly insolvent”.
SSUK has a monthly wage bill of £3.7 million and just £600,000 in the bank, the court heard, while Liberty has several more companies in insolvency across nine jurisdictions.
Kabel said the company was still hopeful to buy back SSUK with support from investors.
A government spokesperson said: “We know this will be a deeply worrying time for staff and their families, but we remain committed to a bright and sustainable future for steelmaking and steelmaking jobs in the UK.
“It is now for the independent official receiver to carry out their duties as liquidator, including ensuring employees are paid, while we also make sure staff and local communities are supported.”
The GMB union said it was “another tragedy for UK steel”. In April, the government took over the day-to-day running of British Steel’s Scunthorpe plant to prevent its Chinese owners from closing its blast furnaces.
Roy Rickhuss, general secretary of the Community union, added: “This is an extremely worrying time for our members at Liberty Steel, but the government’s intervention must mark a turning point to deliver certainty for these strategically important businesses.
“Crucially, jobs must be protected throughout any restructuring and transition to new ownership. Steelworkers at Liberty Steel are highly-skilled and hugely experienced; they are quite frankly irreplaceable and will be critical to delivering future success for the businesses.
“As a first priority wages must be paid and the outstanding twelve months of pensions contributions must be secured. Resolving pay and pensions is urgent and we are closely monitoring the situation, but in talks with senior officials we have received firm assurances that both matters are in hand.
“We welcome the Government’s intervention which is yet another demonstration of our Labour Government’s commitment to delivering for steelworkers and our vital foundation industry. However, in taking control of the business the Government has assumed responsibility for our livelihoods and our communities, and we will of course be holding them to account.”
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Employee relations opportunities on Personnel Today
Browse more Employee Relations jobs
